1 | Building Technologies Program eere.energy.gov

The Parker Ranch installation in Hawaii

Manufacturer Impact Analysis Overview and Preliminary Results

Distribution Transformers October 13, 2011

Liquid Immersed and Medium Voltage Dry Type
2 | Building Technologies Program eere.energy.gov

Industry 

profile

Develop 

strawman 

GRIM*

Develop 

interview 

guide

Interviews 

& industrywide/ 

subgroup 

analyses

Assess direct 

employment, 

manufacturing 

capacity, and 

cumulative 

burden

Finalize

MIA 

results 

for 

NOPR

Phase 2

* Government Regulatory Impact Model (GRIM)

Phase 1 Phase 3

Manufacturer Impact Analysis:

Overview
3 | Building Technologies Program eere.energy.gov

• Purpose

– To assess the impacts of standards on manufacturers;

– To identify and estimate impacts on manufacturer sub-groups that may 

be more severely affected than the industry as a whole; and

– To examine the direct employment impacts, manufacturing capacity, 

and the cumulative regulatory impact on the industry.

• Methodology 

– Analyze industry cash flow and industry net present value (INPV) 

through use of the Government Regulatory Impact Model (GRIM); and

– Interview manufacturers to refine inputs to the GRIM, develop subgroup analyses, and address qualitative issues.

MIA Overview
4 | Building Technologies Program eere.energy.gov

• Core steel availability

– Supply and demand: There is currently a limited supply of M3, M2, ZDMH, H-0 DR, and SA1 

on the market. If standards are raised, demand for these grain-oriented electrical steels 

would increase.

– Amorphous steel: If efficiency levels are set so high that only amorphous can be used, then 

manufacturers may be subject to monopolistic pricing.

• Size and weight constraints for pole mounts

– The increased size and weight of higher efficiency transformers may not be able to meet the 

physical constraints of utility poles 

• Conversion costs and stranded assets

– Producing higher efficiency transformers may require the purchase of new equipment and 

significant R&D investment

Manufacturer Key Issues - Liquid
5 | Building Technologies Program eere.energy.gov

Capital Conversion Cost Calculations

Engineering 

Analysis

LCC Analysis

Shipments Analysis

Key Inputs Methodology

Base Case Steel Demand 

By Type and Quantity 

(Forecast for 2016)

Standards Case Steel Demand 

By Type and Quantity 

(Forecast for 2016)

Change in Steel Mix and 

Quantity

Manufacturer 

Interviews

Equipment 

Supplier Interviews

Previous 

Rulemaking

Production 

Processes and 

Equipment 

Capacities

Equipment 

Costs New Equipment Needs

CAPITAL CONVERSION 

COSTS
6 | Building Technologies Program eere.energy.gov

• Based on industry interviews and calls with equipment 

suppliers, the major capital expenses related to any new 

efficiency standards would be associated with expanding 

capacity for amorphous core transformer production.

– Large ticket items include specialized core cutting equipment, 

new annealing ovens, overhead cranes, and epoxy coating 

equipment

– For a line capable of producing roughly 1000 tons/yr of 

amorphous core, DOE estimates that manufacturers would 

incur a capital cost s of between $450K and $950K, largely 

driven by the quality and brand of the core cutting 

equipment.

Amorphous Production Line 

Estimates